Moody's Launches AI Tool for Stablecoin Risk Assessment

Introduction to Digital Asset Monitor

Moody's Analytics has introduced a groundbreaking tool called the Digital Asset Monitor (DAM) to the crypto market. This advanced AI tool is engineered to predict stablecoin depegging by evaluating risks and volatility in decentralized finance (DeFi).

Features of the Digital Asset Monitor

The Digital Asset Monitor analyzes data from 25 fiat-backed stablecoins, including well-known tokens like PayPal Coin (PYUSD), Tether, and USD Coin. It provides a 24-hour forecast on the likelihood of a stablecoin deviating from its pegged fiat value. Additionally, the tool offers insights into the issuer's stability, details on asset-holding custodians, and assessments of reserve quality.

Importance of Monitoring Stablecoin Risks

The launch of DAM is timely, considering the rapid growth of the stablecoin market, which now comprises approximately 10% of the entire crypto market. The need for such predictive tools is highlighted by the fact that large-cap stablecoins have experienced depegging events over 600 times this year. Depegging is identified as a fluctuation greater than 3% against the fiat currency peg.

Conclusion

Moody's Digital Asset Monitor serves as a critical innovation for stakeholders in the crypto market, providing essential risk assessments for stablecoin investments. Its ability to predict depegging and evaluate issuer stability aims to enhance the security and reliability of investments in this volatile market.